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yyiZMA^    of^-'UKi       L/y^^uiAjy-' 


LJyimMyU//yUMA^    o^^-' 


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i"  .. 


—  REMARKS 


c.  p.'nujsrTiisrGTOisr, 


// 


BEFORE    THE 


I  8^21'"-  l«^oo 


COMMITTEE 


ON   THE 


^'^Bi^i^a^  'Wt  €%  Pn^^^ 


Saturday,  November  17,   1877, 


PUBLISHED     FOR     THE     USE     OF     THE     COMMITTEE. 


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T-ay^t. 


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Buioroh  Libf«l^ 


emcroft  Library 

Eemarks  of  C.  P.  Huntington. 


Mr.  Hu:r^TiKGTON. — Mr.  Chairman,  I  do  not  pro- 
pose to  say  anything  about  the  legal  aspect  of  the 
case,  but  to  try  to  show  you  that  it  is  for  the  interest 
of  the  Government  and  our  own  interest,  that  we 
come  to  an  amiicable  settlement  of  these  matters, 
and  much  that  1  have  to  say  relates  to  the  great  cost  of 
the  road  w^hen  it  was  built,  and  as  it  was  built,  and 
showing  what  assets  we  have,  and  our  ability  to  do 
what  w^e  propose.  My  associates  and  myself  have  been 
in  business  a  great  many  years  ;  I  have,  for  almost 
forty-three  years  been  in  business  for  myself,  and  never 
had  any  paper  go  to  protest  in  all  that  time.  I  had 
some  out  in  1837,  and  in  all  the  great  panics  since.  And 
I  do  not  w^ant  to  have  anything  go  to  protest  connected 
with  the  Central  Pacific  Railroad,  though  it  is  not  a 
personal  matter  of  mine. 

While  these  learned  gentlemen  have  been  discussing 
the  power  of  Congres-^,  under  the  Constitution,  to 
change  and  alter  these  Pacific  Railroad  contracts,  it  has 
seemed  to  me  the  real  question  before*u^  is'^nOt  s'6»much 
a  legal  as  a  business  one.  Whether  these  legal  gentle- 
men are  able  to  convince  you  that  Congress  has  no  au- 
thority over  the  subject,  or  not,  I  think  I  can  make  it 
clear  to  you,  that,  as  a  business  transaction.  Congress 
cannot  afford  to  take  advantage  of  its  own  construc- 
tions of  the  statutes,  because  it  would  not  be  for  its  in- 
terest, nor  for  its  credit,  to  do  that  which  would  be  con- 
demned among  honorable  men.  Laying  one  side  of  the 
legal  bearings  of  the  matter,  let  me  try  and  present  it 
from  the  business  standpoint. 

.  C2  H^ 


I  am  one  of  the  few  persons  who  originally  associated 
and  organized  for  the  purpose  of  building  a  material 
portion  of  the  Pacific  Railr^md.  Every  one  of  the 
Boards  of  Directors  which  began  and  carried  on  the 
work  of  constructing  the  Central  Pacific  Railroad,  came 
into  the  enterprise  at  my  personal  request.  Before  do- 
ing so,  each  one  of  them  wanted  to  understand  the  con- 
tract with  the  Government,  and  to  know  if  these  terms 
could  be  depended  on.  We  sought  the  opinion  of  the 
most  eminent  counsel  thereon,  and  they  all  gave  the 
same  answer :  that  the  contract  could  not  be  changed 
without  our  consent,  so  long  as  the  Company  was  not 
in  default.  All  our  fortunes  were  embarked  in  the  im- 
mense undertaking  upon  this  ground,  wliich  we  are  still 
advised  is  unassailable. 

Without  this  assurance,  none  of  us,  I  am  sure,  would 
have  been  diverted  from  our  ordinary  gainful  pursuits 
to  the  task  of  creating  a  highway  for  the  use  and  bene- 
fit of  the.  Government.  Could  we  have  foreseen  that  a 
grave  committee  would,  at  this  time,  when  the  work  is 
done,  and  the  country  has  reaped  incalculable  benefit 
from  it,  be  called  upon  to  consider  the  power  and  pro- 
priety of  changing  the  terms  of  that  contract  to  our 
injury,  I  certainly  should  never  have  chosen  for  the  de- 
clining years  of  my  life,  so  riskful  and  arduous  a  ser- 
vice, and  should  have  been  spared  this  appearance  be- 
fore you. 

My  understanding  was,  that  these  words  you  have  been 
discussing,  were  inserted  in  the  fear  that  the  companies 
might  fail  to  complete  the  roads,  and  out  of  a  spirit  of 
abundant  caution,  this  power  of  alteration  w^as  reserved 
in  case  it  was  necessary  to  put  the  work  into  other 
hands  for  completion  ;  but  it  was  well  understood  (and 
the  debates  will  bear  me  out)  that  there  was  to  be  no 
forfeiture  and  no  change  to  our  detriment,  so  long  as 
we  were  in  good  faith  carrying  out  our  part  of  the  work. 

As  I  said,  the  proper  question   for  our  consideration 
is,  not  so  much  whether  Congress  may,  at  its  pleasure, 


alter  this  contract  and  impose  new  terms  and  conditions, 
as  whether  it  w^ould  be  fair,  reasonable,  advantageous 
and  honorable  to  attempt  to  do  so,  or  to  evince  a  desire 
so  to  do,  without  our  consent  so  long  as  we  are 
faithfully  fulfilling  our  part  of  it.  No  impar- 
tial or  unpredjudiced  referee  would,  I  am  con- 
fident, entertain  any  serious  doubt  about  our 
right  to  go  on,  as  we  have  done,  complying  with  the  law 
for  the  remaind'T  of  the  thirty  years  and  demanding 
that  the  Government  should  do  the  same.  But  inas- 
much as  doubts  have  arisen,  apparently,  in  some  minds 
it  may  be  well  here,  and  now,  to  do  away  with  all  simi- 
lar misunderstanding  for  the  future.  The  Central  Pa- 
cific Company  cannot  accept,  nor  will  it  give  its  assent 
to,  any  new  covenant  which  leaves  this  question  open. 
Any  phraseology  which  accords  to  Congress  the  right, 
or  privilege,  to  alter  the  terms  and  conditions  of  its 
agreement  with  us,  so  long  as  we  comply  with  them, 
may  as  well  be  abandoned,  if  our  consent  is  expected. 
If  we,  on  our  part,  should  fail  in  any  particular,  then, 
of  course,  there  can  be  no  such  objection.  Fair  dealing, 
business  usage,  and  self-respect  require  no  less,  and  no 
more  at  our  hands. 

Lest  some  of  you  may  have  been  misled  as  to  the 
origin,  nature,  outlay  and  results  of  this  transaction 
with  the  Government  let  me  offer  a  few  pertinent  facts: 

First. — As  to  thf  value  of  this  franchise  and  con- 
tract when  w^e  first  accepted  it.  It  is  commonly 
spoken  of  as  a  munificent  and  underserved  bounty 
to  a  few  individuals,  in  the  face  of  the  fact 
that  the  advances  are  treated  as  debts  to  be 
paid  at  maturity,  and  the  lands  are,  after  we  have  put 
a  road  through  them,  so  lightly  regarded  as  not  to  be 
worth  the  application  upon  a  second  mortgage  claim 
not  due  for  twenty  years. 

Well,  this  munificent  bounty,  the  great  charter  which 
is  now  sometimes  spoken  of,  as  an  extravagant  bargain, 


6 

was  not  always  so  regarded.  At  the  first  meeting  called 
to  organize  tbe  Union  Pacific  Company  at  Chicago,  sub- 
scriptions enougli  could  not  be  found  to  comply  with 
the  act,  and  for  months  afterward  the  wliole  franchise, 
with  allits  much  criticised  privileges,  was  hawked  about, 
and  might  have  been  had  for  the  asking. 

The  Central  Pacific,  it  is  true,  raised  money  enough 
to  build  and  equip  nearly  forty  miles  of  road,  reaching 
up  into  the  mountains,  before  Congress  came  to  our  re- 
lief, in  1864  ;  but  there  never  was  a  time  during  the  years 
while  the  road  was  climbing  the  Sierra  Nevadas  (neither 
before  nor  after  that  amendment  was  passed,)  when  my 
associates  would  not  gladly  have  sacrificed  a  part  of 
their  investment,  if  a  purchaser  could  have  been  found. 
There  were  then  no  capitalists  anxious  to  shoulder  such 
a  load,  (while  it  was  not  even  whispered  that  Congress 
might  break  its  faith,)  so  uninviting  did  the  induce 
ments  appear.  Our  utmost  efi'orts  in  this  direction 
were  in  vain.  No  parties  could  be  found  to-  put  their 
money  into  it,  but  our  few  selves ;  and  I  discovered 
that  the  credit  of  my  business  firm  was  injured  by  our 
connection  with  it.  My  partner  and  myself  were  re- 
peatedly admonished  that  we  should  sink  our  entire 
fortunes  in  the  work,  and  get  back  no  returns. 

The  assistance  we  received  from  San  Francisco,  Sacra- 
mento, and  other  counties,  contributed  for  local  reasons 
chiefly,  gave  us  some  help  in  getting  through  the  hard- 
est work  we  encountered  in  the  Sierra  Nevada  Moun- 
tains. Being  remote  from  the  great  money  centres,  the 
company  wasjcomijaratively  unknown,  and  without  cred- 
it. My  few  associates  and  myself,  called  in  gold  loans 
for  large  amounts  we  had  outstanding,  well  secured, 
drawing  two  per  cent,  per  month,  to  meet  the  labor  pay- 
rolls at  the  high  prices  then  prevailing,  in  order  to  con- 
tinue the  work.  The  first  million  and  a  half  of  first 
mortgage  bonds  could  only  be  negotiated  upon  condi- 
tion that  we  should  give  our  personal  guaranty  for  the 
payment  of  the  interest  for  a  period  of  ten  years — which 
we  did ! 


No  government  bonds  were  received  until  May,  1866, 
ten  months  after  the  passage  of  the  later  act,  although, 
the  work  w^as  done  more  than  half  the  distance  up  the 
Sierra  Nevada s.  Great  difficuly  was  experienced  in  get- 
ting bonds  from  the  Department,  or  money  from  any 
source,  until  we  bad  reached  the  summit,  and  had  got- 
ten through  the  hardest  and  most  difficult  portion  of  all 
our  work. . 

After  we  did  receive  the  bonds,  we  found  their  markel 
value  had  shrunk  far  below  their  estimated  value  when 
the  contract  was  made,  in  1862.  As  fast  as  the  bonds 
came  in  they  were  converted  into  gold  to  pa}^  for  labor  ; 
one  Jarge  lot  of  our  first  mortgage,  I  distinctly  remem- 
ber, being  sold  for  less  tlian  their  face  value  in  currency 
and  turned  into  coin  at  the  rate  of  222. 

Senator  CoNKLiNG. — I  do  not  understand  that. 

Mr.  Huntington, — We  sold  our  bonds  and  bought 
gold  at  222.  We  paid  $2^2^  in  currency  for  a  dollar  of 
gold.  We  had  to  sell  our  bonds  for  less  than  par,  al- 
though the  Central  Pacific  never  sold  its  securities  very 
low. 

The  companies  received  no  help,  but  rather  hindrance, 
from  the  government  in  marketing  these  currency 
bonds.  'I'he  then  Secretary  of  the  Treasury  declined  to 
receive  them  as  security  for  bank  circulation,  and  al- 
though they  were  full  government  bonds,  they  were 
added  as  an  appendix  to  the  Monthlj^  Debt  Statements, 
instead  of  being  incorporated  with  the  other  issues— as 
ii  the}'  were  not  part  of  the  public,  but  a  private  rail- 
road debt — thus  casting  a  suspicion  upon  them  and  de- 
pressing them  in  the  estimation  of  investors.  My  recol- 
lection is  that  some  of  them  changed  hands  as  low  as 
90  cents  in  currency' . 

Measured  by  their  gold  value,  or  by  their  purchasing 
power  of  labor  or  railroad  supplies,  there  was  even  a 
greater  loss.  Our  books  show  that  the  proceeds  of  the 
$25,885,120  of  government  currency  bonds,  was  $19,119,- 
552.95. 

Senator  Tii  u  rm  an  .  —Gold  ? 


•   8 

Mr.  Huntington.— Yes  ;  with  which  to  build  and 
equip  nearly  750  miles  of  railroad  through  an  uninhabit- 
ed and  mountainous  country,  affording  neither  timber, 
fuel,  water,  ballast,  food  nor  forage,  for  the  most  part, 
and  many  thousand  miles  distant  from  its  base  of  ma- 
terial supplies,  and  yet  there  are  many  persons  affect  to 
believe  that  the  road  was  built  and  equipped  out  of  the 
proceeds  of  the  Government  assistance. 

Many  wild  and  absurd  stories  have  been  put  in  circu- 
lation as  to  the  cost  of  these  railroads.  Allow  me  to 
furnish  you  with  a  few  facts  which  will  show  you  the 
real  elements  and  conditions  with  which  its  builders 
contended,  many  of  which  did  not  exist  when  we  entered 
on  the  work. 

This  is  to  show  the  great  cost  of  tlie  work  then  neces- 
sary, and  the  small  amount  it  could  be  built  for  now  in 
comparison,  as  affecting  the  relative  value  of  these  second 
mortgage  securities  :  so  that  we  see  the  necessity  of 
making  the  most  now  out  of  our  assets. 

Take  the  item  of  rails,  for  instance  ;  iron  rails  com- 
manded during  the  period  of  construction  more  tlian 
$100  per  ton.     Steel  rails  can  now  be  bought  for  $40. 

Freights,  an  important  element  with  us,  ranged  from 
$20  to  $33  per  ton.  The  last  lot  I  shipped  to  San  Fran- 
cisco I  paid  $5  freight  per  ton.  This  was  within  the  last 
week  or  two.  Insurance,  also  a  heavy  item  of  expense, 
during  the  war  was  as  high  as  17  per  cent.,  whereas  now 
the  regular  rate  is  2^  per  cent. 

Locomotives,  for  which  the  government  was  a  large 
customer,  cost  us  as  high  as  $32,500. 

I  will  say  here  that  we  paid  six  per  cent.  Government 
tax  on  all  these  things  over  and  above  their  prices.  The 
same  kind  can  be  bought  for  $7,000  at  this  time  ;  and  I 
paid  as  high  as  $4,000  freight  on  engines  taken  over  the 
Isthmus.  The  same  machines  can  now  be  shipped  over- 
land by. rail  for  less  than  it  cost  then  to  take  them  down 
and  box  them  to  be  sent  as  they  were  then. 

Powder,  an  article  of  which  we  consumed  immense 


quantities,  was  not  only  high-priced  and  hard  to  get, 
but  it  was  also  hard  to  ship,  as  special  permission  from 
the  War  Department  was  for  a  long  time  required. 

So  of  rolling  stock  of  all  kinds,  telegraphic  imple- 
ments, and  many  other  articles,  they  were  very  much 
higher  at  the  time  we  needed  them  than  before  or  since. 

Supplies  for  man  and  beast  had  to  be  hauled  from  the 
terminas  of  the  line,  as  the  country  through  which  the 
work  was  done  afforded  next  to  nothing.  Only  one 
white  man  lived  between  the  Big  Bend  of  the  Truckee 
and  Bear  river,  a  distance  of  about  600  miles. 

The  water,  both  for  drinking  and  steam  purposes  was, 
for  long  distances,  unfit  for  use.  We  had  to  analyze 
the  water,  east  of  the  Sierras,  before  we  dared  use  it  for 
steam  purposes.  At  the  very  best  we  had  to  haul  it  in 
trains  for  long  distances  ;  and  even  now,  after  comple- 
tion, we  are  obliged  to  convey  water  in  many  places  by 
iron  pipes,  in  som3  instances  twenty  miles,  for  the  use 
of  trains  and  workmen. 

Water  along  the  line  of  the  road  does  not  make 
steam.     It  has  soda  and  other  minerals  in'it  which  pre- 


vents our  using  it. 


The  difficulties  from  fuel  were  hardly  less  troublesome. 
We  were  required  to  haul  fuel  eastward  over  600  miles 
for  the  use  of  trains  ;  and  even  at  this  day  we  are  com- 
pelled to  burn  coal  mined  in  Australia  on  i3ortions  of 
our  road,  at  an  expense  of  more  than  six  times  that  of 
some  eastern  roads. 

After  we  had  gotten  the  track  laid  across  the  moun- 
tains, it  became  a  problem  whether  we  could  keep  it 
open  for  traffic  in  the  w^inter  season.  We  commenced 
putting  the  road  under  cover,  and  after  serious  en- 
counters Avith  the  snow,  but  with  very  slight  interrup- 
tions, we  have  now  reached  assurance  by  building  nearly 
forty  miles  of  snow  sheds,  all  of  very  substantial  char- 
acter, and  which  include  miles  of  snow-galleries  built 
strong  enough  to  sustain  tlie  passage  of  avalanches  of 
snow,  at  a  cost   of  over  $100,000  per  mile  for  covering 


10 

alone  !  These  structures,  and  tlie  road  under  them,  are 
maintained  at  a  heavy  expense,  summer  and  winter,  so 
as  to  guard  against  the  slighest  interruption  from  storm 
or  fire.  No  railroad  in  the  world,  so  far  as  I  know,  has 
been  constructed  at  such  disadvantage,  or  is  maintained 
with  similar  outlay.  Often  we  have  had  to  put  ten  lirst- 
class  engines  behind  one  snow-plow. 

Notwithstanding  that  the  road  was  constructed  and 
equipped  with  as  much  (^.conomy  as  was  practicable, 
the  officers  of  the  company  using  the  same  diligence 
and  frugality  in  this,  as  in  their  private  business,  the 
Central  Pacific  Railroad,  built  at  the  time,  and  under 
the  circumstances  it  was,  during  a  period  of  turbulence, 
of  inflated  pHces,  and  of  inordinate  demand  for  money 
and  supplies  for  railroad  purposes,  necessarily  cost  a 
large  amount  of  money . 

There  is  no  difficulty  in  ac(5ounting  for  the  aid  rectiiv- 
ed  from  the  government,  the  proceeds  of  its  mortgage 
bonds,  and  the  sums  derived  from  all  other  sources  ; 
and  looking  back  upon  it  now,  my  wonder  is  how  we 
ever  managed  to  get  through  as  well  as  we  did,  in  view 
of  the  discouragements  and  opposition  we  encountered. 
For  one  large  addition  to  ourexpeuditures  the  govern- 
ment is  indirectly  responsible  ;  or,  at  all  events,  is  the 
chief  beneficiary,  while  the  burden  must  apparently 
be  borne  wholly  by  the  companies,  who  profited  noth- 
ing by  it.  By  directing  the  Pacific  Railroad  to  be 
constructed  from  either  end  toward  a  point  of  junc- 
tion, Congress  instigated  (I  think  purposely,  and  per- 
haps wisely  for  itself)  a  rivalry  between  the  eastern  and 
western  parties,  in  order  to  hasten  the  completion  of 
the  through  line  without  adding  to  the  government 
assistance  for  this  accelerated  speed.  The  circumstance 
that  there  was  no  point  for  junction  so  suitable  as  the 
settled  and  fertile  valley  on  the  east  bank  of  Salt  Lake, 
which  is  adjacent  to  the  only  coal  deposits  along  the 
route, led  to  an  exhausting  and  unparalleled  race  in  build- 
ing on  the  part  of  both  corporations  to  reach  the  coveted 


11 

spot.  The  cost  of  many  items  was  doubled  by  this 
tremendous  exertion.  By  this  greater  haste  the  govern- 
ment and  the  country  got  the  use  of  the  through  line 
more  than  seven  years  before  the  allotted  time,  and 
thereby  saved  several  millions  a  year  in  disbursements ; 
while  we,  in  common  with  the  eastern  company,  lost 
proportionately  by  not  adopting  the  more  leisurely  policy 
of  linishing  the  road  last  July,  which  was  the  time  allowed 
by  the  acts.  The  difference  to  this  company  between 
the  prices  paid  for  labor,  gold,  and  materials,  added  to 
the  difference  between  the  prices  realized  for  our  own 
and  the  government  securities  and  those  since  prevail- 
ing, would,  I  estimate,  amount  to  many  millions  of  dol- 
lars ;  all  of  which  we  might  have  saved  by  consuming 
ten  years  in  the  construction  of  the  last  six  hundred 
miles,  as  the  law  allowed,  instead  of  two  years,  as  we 
did.  The  loss  to  the  government  by  the  delay  would 
•have  been  very  much  more  than  we  suffered  by  this  great 
haste,  and  it  would  have  appeared  in  the  treasury  led- 
gers as  disbursements,  although  their  pages  contain  no 
equivalent  credit  to  us. 

An  allusion  has  been  made  by  some  member  of  the 
committee  to  the  vast  sum  of  the  nominal  indebtedness 
of  these  companies  if  interest  were  compounded.  Lest 
there  be  som<i  confusion  in  your  minds  as  to  this  ques- 
tion of  interest,  and  compounding,  let  me  state  it  corect- 
ly,  so  as  to  show  whether  the  gov<^rnment  will  gain  or 
lose  (in  dollars  and  cents)  by  this  transaction  with  these 
companies;  and  how  much?  It  is  proper  to  enquire 
what  was  the  consideration  which  the  government  was 
to  receive  in  return  for  this  annual  outlay  for  interest, 
all  of  which,  be  it  remembeied,  is  to  be  repaid  at  the 
end  of  the  thirty  years.  It  was  the  enjoyment,  use,  and 
benefit  of  the  road  ;  that  it  has.  If  tlierefore,  it  is  right 
to  compound  the  interest  against  the  companies,  it  is 
proper  to  compound  the  amounts  on  the  other  side 
also.  What  are  they  ?  By  a  report  made  to  the  Senate, 
February  24th,  1871,  by  the  Pacific  Railroad  Committee, 
it  is  stated,  and  the  items  are  referred  to,  that  the  cost 


12 

of  government  transportation  in  the  territory  west  of  the 
Missouri  river,  between  1848  and  1864,  was  more  than 
100  millions  in  gold,  and  at  the  date  of  the  report  was 
$8,000,000  per  annum,  and  constantly  increasing.  In  a 
single  year  of  hostilities  it  has  been  known  to  run  up  to 
about  $18,000,000.  Taking  it  at  $8,000,000,  however,  I 
have  the  calculations  of  an  Actuary  of  repute  as  to  the 
amount  which  would  thus  have  been  expended  in  the 
course  of  each  year,  without  the  railroad,  and  the  accu- 
mulations upon  those  sums  if  they  had  been  invested, 
and  it  amounts  for  the  thirty  years'  term,  to  $652,213,- 
747.20. 

Now,  on  the  other  side,  with  the  railroads,  we  have 
the  annual  interest  payments  on  behalf  of  $55,092,192 
bonds  issued  to  the  Union  Central  and  Western  Paci  ic 
roads,  comprising  the  main  line,  and  it  amounts,  if  com- 
pounded for  thirty  years,  to  $324,581,329.39,  or  a  differ- 
ence of  $327,632,417.81  in  favor  of  the  government. 
The  roads  certainly  could  not  have  been  built  without 
this  aid  and  these  bonds. 

Senator  TiiumrAis'.  -You  have  taken  the  average  cost 
of  transportation  before  the  railroad  was  built. 

Mr.  Huntington. — But  the  point  was  that  no  one 
would  have  built  the  road  without  this  aid  ;  and  as  this 
expense  was  growing,  it  is  fair  to  presume  that  it  would 
have  kept  on  increasing — at  least,  that  it  would  not 
have  lessened,  if  the  roads  had  not  been  built. 

Senator  Tiiurman. — But  you  have  not  deducted  from 
that  what  the  goverment  has  paid  to  the  companies. 

Mr.  Huntington.— Certainly  ;  here  it  is.  The  bonds 
that  the  government  has  issued  amount  to  $55,092,192. 
The  actuary  ha?  taken  that  sum  and  counted  the  inter- 
est on  it,  compounding  it  every  six  montlis  for  thirty 
years  ;  and  to  the  interest  he  has  added  tlie  principal, 
and  the  two  together  make  $324,581,329,39. 

Senator  TiiURM AN.— You  do  not  get  my  idea.  You 
want  to  know  what  the  government  has  saved  in  trans- 


13 

portation.  What  it  saved  in  transportation.  I 
will  assume,  for  your  purposes,  though  I  do  not 
exactly  admit  it  to  be  right,  to  be  the  difference 
between  what  it  pays  the  railroad  companies  for  trans- 
portation, and  what  it  would  have  paid  if  there  had 
been  no  railroaid,  and  that  instead  of  being  $8,000,000  a 
year,  would  have  been  only  about  $6,000,000,  would  it 
not?  The  government  pays  your  companies  $2,000,000 
a  year  ? 

Mr.  HuNTiN-axoN". — About  that. 

Senator  Thurman. — So  your  actuary  has  taken 
$8,000,000,  instead  of  $6,000,000? 

Mr.  Huntington. — But  that  was  what  the  Govern- 
ment was  paying  without  the  roads.  Assuming  that 
the  road  would  not  have  been  built  without  this  aid, 
therefore  by  giving  this  aid,  it  seems  to  me,  they  have 
saved  this  difference. 

Senator  Titurman. — What  the  government  has  saved 
is  the  difference  between  what  it  pays  and  what  it  would 
have  to  pay  if  the  road  was  not  there.  Then,  assuming 
it  would  have  been  $8,000,000,  it  is  the  difference  be- 
tween $3,000,000,  and  what  it  now  pays,  $2,000,000,  that 
is  $6,000,000.  The  calculation  should  have  been  made 
on  $6,000,000,  and  not  $8,000,000. 

Mr.  HuNTiNaTON.— You  may  be  right  ;  but  I  do  not 
so  understand  it. 

Senator  McDonald.— I  ask  whether  that  $8,000,000, 
did  not  embrace  a  very  large  amount  of  transportation 
that  is  not  carried  by  the  road  now,  and  for  which  the 
government  has  to  pay,  notwithstanding  the  road  ? 

Mr.  HuNTiNOTON. — We  take  care  of  that  country  ;  I 
will  show  as  it  were  when  we  built  the  Central  Pacific 
Rail  Road ;  as  we  built  it  along  I  used  to  tell  them  at 
tlie  war  department  they  need  not  bother  about  the 
Indians  on  the  line  of  the  Central  Pacific  ;  we  would 
take  care  of  the  Indians  and  they  should  not  be  har- 
med.    Just  as  fast  as  we  have  come  to  the   Indians,  we 


14 

have  made  their  acquaintance,  as  it  were.  The  Piutes 
were  very  bad  ;  they  had  about  three  thousand  warriors 
and  not  long  before  we  got  to  the  big  bend  of  the 
Truckee,  they  had  a  fight  and  killed  175  men. 

Senator  Thurman.— That  estimate  made  by  the  Rail- 
road Committee,  includes  all  the  cost  of  transportation 
west  of  the  Missouri  river. 

Senator  McDonald. — A  great  part  of  that  has  yet  to 
to  be  paid  by  the  government  in  transportation  provided 
for  in  other  ways. 

Mr.  Huntington. — The  country  aw^ay  uy)  north  was 
not  settled  at  all.  There  are  now  new  settlements  to- 
ward the  Canada  border  ;  but  our  road  now  substantially 
takes  care  of  that  portion  that  this  refers  to.  There  was 
not  anybody  away  up  above  then,  as  I  understand  ;  the 
Indians  had  that  to  themselves  ;  but  our  traffic  and  im- 
migrants going  across  from  the  Missouri  River  to  the 
Sacramento,  and  vice  versa  were  substantially  on  this 
line  ;  and  there  is  where  the  expense  was,  to  take  care 
of  that  immigration.  I  think  I  am  correct  in  that ;  and 
as  we  have  had  this  figure,  and  it  seems  to  me  to  be 
right ;  the  Government  saves  $827,632,417^.  I  may  be 
in  error,  but  the  figures  are  no  doubt  correct. 

This  is  the  relative  saving  by  the  Government  from 
its  engagements  in  this  undertaking,  if  it  should  never 
get  back  a  dollar  of  this  miscalled  subsidy. 

This  is  looking  at  the  matter  solely  from  the  stand- 
point of  profits  of  a  money  broker.  There  are  other 
aspects  in  which  it  can  be  viewed  and  shown,  the  Gov- 
ernment has  been  a  great  gainer.  Prior  to  the  construc- 
tion of  the  road,  the  Government  was  the  principal 
freighter,  and  was  its  own  iiisurei-  of  both  freight  and 
teams  in  all  that  country  west  of  the  Missouri.  My  im- 
pression is,  that  the  frequent  losses  reported  to  the  de- 
partment of  both  freight,  teams  and  outfit,  in  many 
cases  after  having  been  hauled  hundreds  of  miles,  at 
the  rate  of  1^  cents  per  hundred  pounds,  or  26  cents 


15 

per  ton,  per  mile,  have  been  charged  to  the  account  of 
casualties  of  war,  and  are  not  included  in  these  trans- 
portation accounts. 

Contrast  that  state  of  things,  and  the  differenrein  the 
disbursements  now,  when  the  railroads  carry  supplies 
for  about  a  cent  per  ton,  per  mile,  (many  of  them  less), 
and  guarantee  their  delivery.  As  an  instance  of  the 
multiplied  economy  and  efficiency,  the  Government  de- 
rives from  our  faithful  performance  of  this  undertaking. 
T  may  mention  that  in  the  year  1867,  a  single  contract 
was  made  for  the  conveyance  of  the  fragmentary  mails 
between  the  advancing  termini  of  the  railroads,  which  ic 
was  supposed  had  years  to  run,  at  the  rate  of  $1,750,000 
per  annum  ;  whereas,  now  I  have  no  doubt,  forty  times 
the  weight  of  mails,  is  carried  over  the  same  distance 
for  about  $140,000  per  iinnum. 

The  Chairman. — Do  you  mean  guarantee  their  de- 
•  livery  beyond  the  end  of  your  line  ? 

Mr.  HTJN"T[NaTox. — No  ;  only  to  our  terminus  ;  but 
the  losses;  were  very  great,  as  I  have  understood,  in 
goods  crossing  the  plains  that  were  taken  by  Indians, 
and  many  cases  where  they  got  them  nearly  to  Salt  Lake 
the  mules  wen^  run  away  and  stolen,  and  the  govern- 
ment had  to  stand  the  loss.  When  you  reflect  there  were 
hundreds  and  thousands  of  emigrants  crossing  this  ter- 
ritory, unpeopled  except  by  Indians,  hostile  as  a  rule, 
occupying  with  their  teams  a  whole  season  in  the  jour- 
ney, and  that  now  the  greater  stream  of  emigrants  is 
whirled  over  in  five  days,  and  in  comparative  comfort, 
thereby  saving  a  whole  season's  industry,  it  will  be 
seen  tliat  in  this  item  alone  the  gain  to  the  people  far 
outweighs  the  Intercast  outlay. 

I  need  not  allude  to  the  varied  benefits  to  the  commerce 
of  the  country  by  our  increased  facilities  for  communica- 
tion with  Japan,  China,  Australia  and  the  other  coun- 
tries boideri  ng  on  the  Pacific,  nor  the  influences  of  the 
railroad  on  the  mining  industries  of  our  Western  States 
and  Territories,  manv  of  wdiich  could  not  have  been  con- 


16 

ducted  without  its  presence.     All  these  things  are  as 
plain  to  you  as  to  me. 

But  I  confess  I  was  astonished  when  one  of  your 
number  asked  the  question  of  one  of  the  counsel,  resi- 
dent in  this  city,  if  the  companies  conceded  that  the  5 
per  cent,  of  net  earnings  accruing  to  the  government 
ought  to  be  paid  before  anything  was  divided  among 
the  stockholders  ?  I  was  surprised  also  to  hear  him  re- 
ply affirmatively,  as  I  am  sure  he  would  not  have  done 
so  if  he  had  fully  understood  the  matter  ;  for  why  should 
the  government  get  its  5  per  cent,  when  it  was  getting 
all  its  expected  collateral  advantages  before  the  parties 
who  furnished  the  road,  and  who  put  not  only  their  mon- 
ey, but  also  the  besc  years  of  their  lives  into  the  work, 
get  any  returns  for  their  time  and  money,  and  who  derive 
no  other  advantages  except  the  returns  upon  their  in- 
vestment ?  Such  a  question  would  not  have  been  asked 
if  its  author  had  reflected  that  the  reward  of  the  com- 
panies for  their  venture,  toil  and  time  was  one  of  money 
only.  The  government  was  not  seeking  to  make  money, 
in  a  direct  way,  for  its  own  cofl:Vrs,  but  in  an  indirect 
way  by  advancing  the  facilities  of  the  people,  and  pro- 
moting the  public  welfare.  The  returns  to  the  govern- 
ment were  various  and  they  were  immeasurable;  the  re- 
wards to  the  company  were  in  money  solely  and  they 
were  limited  to  a  reasonable  amount.  The  government 
is  getting  its  benefits  in  so  many  ways  every  day  ;  would 
it  Ije  fair  to  ask  the  comjjanies  to  give  up  their  single 
compensation  in  order  to  enable  it  to  get  back  its  ad- 
vances of  credit  also  1 

If  this  were  a  mere  matter  of  money  lending  and  tak- 
ing security  for  its  return,  it  might  be  so  misunder- 
stood. We  must  constantly  bear  in  mind  the  objects 
and  purposes  of  its  inception.  On  the  part  of  the  Gov- 
ernment, it  was  chiefly,  if  not  wholly,  to  procure  the 
road  and  the  manifold  benefits  to  follow  from  its  cre- 
ation and  use. 

These  considerations  it  has  received.     What  were  the 


1*7 

inducements  on  the  other  side  'i    Reasonable  dividends 
upon  their  investment. 

It  was  oLir  expectation,  as  it  was  the  expectation  of 
the  framers  of  the  act,  that  the  government  transporta- 
tion would  be  of  such  volume  and  would  be  carried  at 
prices  remunerative  enough  to  meet  the  interest  on 
these  advanced  bonds.  Even  after  the  act  of  1864,  gave 
us  half  the  freight  money  with  which  to  meet  the  inter- 
est on  the  equal  amount  of  bonds  with  a  precedent  lien, 
we  supposed  it  might  somewhere  near  approach  the  in- 
terest payments  of  the  Treasury.  In  this  result  we  are 
as  much  disappointed  as  y  3urselves  ;  but  it  is  in  no  way 
our  fault.  We  should  have  been  glad  to  have  done  all 
the  Government  freighting  and  apply  half  the  bills  to 
these  bond  claims  ;  and  I  am  quite  sure  we  have  not 
received  the  reasonable  compensation  for  the  transport- 
ation services  contemplated  by  the  act,  or  the  amounts 
to  our  credit  would  have  been  much  larger. 

What,  then,  is  the  situation  of  the  Government  as  a 
creditor  of  these  companies  ? 

So  far  as  the  Central  Pacific  is  concerned  it  has  a  second 
mortgage  covering  860  miles  of  the  1,300  miles  of  track 
which  are  in  operation.  As  is  the  case  in  many  other 
kinds  of  property,  the  value  of  the  road,  through  cir- 
cumstances in  no  way  under  their  control,  but  which 
may  have  been  subject  to  the  control  of  Congress,  is 
shrinking,  while  the  first  mortgage  remains,  let  us  say, 
stationary  ;  and  at  the  same  time,  the  second  mortgage 
is  increasing  in  amount. 

By  the  time  both  mature  and  become  payable,  it  is  not 
at  all  likely  the  property  will  be  worth  their  aggregate 
sum,  and  if  the  shrinking  and  settling  of  prices  should 
continue  further,  it  may  happen  that  it  will  not  suffice  to 
pay  more  than  the  first  mortgages.  What  rational  pros- 
pect has  the  Government  of  securing  this  payment  out 
of'the  property ^and  its  revenues,  other  than  by  harmon- 
ious co-operation  with  the  companies  ?  Is  it  not  the  part 
of  x)rudence,  as  well  as  of  Justice,  to  aid  them  to  make 


18 

the  most  out  of  their  assets,  and  to  keep  up  their  roads 
to  the  highest  standard  of  efficiency  from  the  revenues  ? 
With  their  co-operation  the  Government  will  be  able  to 
get  its  money  all  back,  besides  the  great  advantages 
which  the  railroad  surely  confers. 

The  companies  desire  to  meet  this  indebtedness  as  fast 
as  they  can  safely  undertake  it,  consistently  with  their 
other  imperative  engagements.  They  want  partic- 
ularly to  know  beforehand  what  they  have  to  do,  so  that 
they  may  prepare  to  do  it.  A  fixed  sum  to  be  paid  semi- 
annually into  a  sinking  fund,  which  will  cancel  the 
debt  by  1,905,  with  the  lands  turned  in,  is  the  extent  to 
which  they  could  safely  pledge  themselves  or  the  prop- 
erty. 

If,  however,  Congress  will  not  consent  to  take  back  the 
lands  (which  I  am  quite  sure  it  would  be  for  its  interest 
to  do,  both  as  a  creditor  of  the  companies,  and  as  the 
holder  of  the  lands  intermixed  with  them),  then  we 
could  not  prudently  undertake  to  pay  all  the  claim  be- 
fore the  year  1910. 

These  lands  are  among  the  assets  of  the  company,  and 
have,  in  the  hands  of  the  Government,  a  large  produc- 
tive value,  and,  therefore,  debt-paying  power. 

They  had  little  value  when  granted  to  us,  and  what 
'   value  they  now  possess  has  been  conferred  upon  them 
by  the  road. 

By  the  terms  of  the  grant  they  are  not  a  solid  body, 
but  in  alternate  square-mile  sections. 

They  consist  for  the  most  part  of  grazing  lands  ;  and 
the  present  arrangement  is  tantamount  to  a  livided 
ownership.  Neither  the  rectangular  system  of  surveys, 
nor  the  alternating  sections  are  favorable  to  the  sale  or 
occupation  of  settlers,  or  to  the  grazing  industry.  The 
land  would  be  better  for  all  parties  if  surveyed  into 
tracts,  with  reference  to  the  topography,  water  courses 
and  springs,  and  thereby  promote  ownership  of  the  soil 


19 

in  conjunction  with  its  occupancy,  which  is  now  almost 
impossible. 

To  survey  them  into  sections  would  cost  an  immense 
sum.  The  present  relations  of  the  companies  and  the 
government  in  regard  to  these  lands  will  have  to  be 
abandoned  sooner  or  later.  The  present  is  a  fitting  op- 
portunity, and  the  sooner  the  whole  belt  passes  into  the 
control  of  the  government  the  better  it  will  be  for  set- 
tlers, for*the  treasury,  and  all  concerned. 

There  are  some  other  reasons  why  the  government 
should  not  now  impose  any  new  or  harsh  conditions 
npon  the  Pacific  railroads.  It  is  evident  that,  besides 
the  competition  they  now  maintain  with  the  water  routes, 
they  will  soon  have  to  compete  with  a  Southern  Pacific 
railroad,  and  perhaps  a  Northern  Pacific  also. 

After  these  through  lines  are  completed  on  either  side 
of  us,  the  profit  on  through  traffic  will  be  less  than  now, 
and  the  net  earnings  will  be  derived  from  the  local  traf- 
fic on  the  great  branches,  on  which  the  government  has 
no  lien. 

Bear  in  mind,  therefore,  that  in  proposing  the  new 
amendment,  we  are  placing  the  government  in  a  better 
position  than  it  is  now  in  ;  and  better  than  it  can  by  any 
possibility  place  itself  by  coercive  legislation. 

In  this  proposition  we  are  binding  1,800  miles  of  track 
and  its  earnings  to  pay  a  second  mortgage  upon  only 
860  miles,  not  due  for  more  than  twenty  years. 

This  the  companies,  from  the  strongest  of  human 
motives,  will  endeavor  to  live  up  to  during  the  poorest 
as  well  as  the  most  prosperous  seasons. 

This  is  a  mu<h  safer  plan  than  the  one  suggested  in 
your  bill  compelling  us  to  come  over  here  to  Washing- 
ton, from  time  to  time,  to  i)ersuade  the  Secretary  of  the 
Treasury  to  lighten  the  law  upon  the  companies  to  en- 
able them  to  pay  their  honest  debts  to  creditors  whose 
claims  have  priority  to  those  held  by  the  Government. 


20 

The  practical  working  of  any  such  plan  on  the  first 
extraordinary  occasion  for  outlay  from  storm,  accident, 
or  interruption  of  its  income  would  result  in  disabling 
the  companies  from  meeting  their  current  expenses  and 
temporary  debt,  and  in  a  government  supervision  of 
the  working  and  management  of  the  road  itself — a  re- 
sult which  I  am  unwilling  to  believe  your  committee 
desires  to  reach. 

We  have  put  in  a  proposition — I  speak  for  the  Central 
Pacific — the  land  at  a  dollar  and  a  quarter  an  acre  ; 
knowing  it  as  I  do,  I  verily  believe  it  is  cheap  at  that 
price 'and  great  fortunes  can  be  made  by  stock  men  in 
taking  that  land  and  having  it  surveyed  so  that  the 
water  is  convenient  to  each  tract.  In  the  rectangular 
system,  half  the  sections  would  be  worth  nothing,  prob- 
ably not  one  in  four  would  have  any  water  on  it  at  all ; 
but,  by  surveying  it  in  suitable  tracts  for  grazing,  it  is 
all  valuable.  We  put  it  in  at  one  dollar  and  a  quarter 
because  we  believe  it  is  cheap,  and  if  this  debt  was  due 
to  any  other  interest,  any  individual  interest,  in  this 
country,  they  would  take  it  and  be  very  glad  to  get  it. 

Senator  Thurmam. — It  is  all  subject  to  preemption,  is 
it  not  ? 

Mr.  Huntington. — Not  yet. 

Senator  Thurman. — It  soon  will  be? 

Mr.  Huntington. — It  soon  will  be. 

The  Chairman. — Why  is  it  not  worth  just  as  much 
to  your  company  as  to  the  Ignited  States  ? 

Mr.  Huntington. — We  cannot  sell  it.  We  used  to 
go  and  see  men  on  it ;  we  would  tell  them  that  we 
wanted  them  to  buy  the  land.  They  would  say  no,  they 
did  not  want  to  buy  it.  "Then  pay  us  rent."  They 
would  say,  "  are  we  on  the  railroad  land  ?  We  thought 
we  were  on  the  government  land.  Now,  tell  us  where 
the  line  is,  and  we  will  drive  the  stock  off  on  to  the  gov- 
ernment land?"  They  used  to  tell  us  that  years  ago, 
but  lately  they  do  not,  because  we  do  not  say  anything 


21 

to  them  about  it.  We  are  selling  no  lands  there,  and 
the  government  is  selling  none.  Occasionally,  men  will 
come  and  want  a  quarter  section  of  land.  We  will 
examine  it,  and  find  it  is  a  spring  affording  perhaps,  all 
the  water  that  there  is  on  ten  thousand  acres.  Gf 
course,  we  will  not  sell  it  to  them,  because  in  many 
cases,  it  would  give  them  the  control  of  five  or  ten 
thousand  acres,  just  as  much  as  though  they  had  the 
fee. 

Senator  Christiancy, — Are  all  these  lands  surveyed 
yet? 

Mr.  HuJs^TLXGTON. — No  ;  much  of  that  country  is  in 
small  valleys,  a  thousand,  two,  three,  four,  five  thous- 
and acres,  with  a  spring  coming  from  the  foot  of  the 
mountains  running  a  mile  or  two,  and  then  sinking. 

Senator  Conkliis^g. — What,  in  acres,  in  round  num- 
bers, is  the  quantity  of  land  you  speak  of? 

I      Mr.   Huntington. — Six  million  acres  we  offer.     We  / 
\  offer  all  the  lands  that  we  have  in  Nevada  and  Utah.       * 

Senator  Conkling. — About  six  million  acres.  To 
what  extent  does  the  Government  own  alternate  sections 
there  % 

Mr.  Huntington, — Exactly  the  same  amount,  along 
the  line  of  the  road. 

Senator  Conkling. — When  you  speak  of  rectangular 
surveys,  you  mean  surveys  in  sections  and  alternate 
sections  ? 

Mr.  Huntington. — Yes,  our  regular  system  for  pub- 
lic lands. 

Senator  Conkling.— What  water  do  you  speak  of, 
streams  or  springs  ? 

Mr.  Huntington.— The  water  in  the  Great  Basin,  all 


22 

sinks  somewhere.     There  is  only  one  river  that  rises  in 
the  Great  Basin,  and  runs  out. 

Senator  Conkling. — Springs  that  appear  and  disap- 
pear ? 

Mr.  Huntington. — Yes,  sir;  they  all  sink  in  the 
basin,  some  at  longer  distances  than  others  ;  some  con- 
siderable rivers  ;  but  almost  every  valley  has  a  little 
water  some  where,  running  a  mile  or  two,  three,  four  or 
five  or  six,  and  then  sinking. 

Senator  Conkling. — You  mean  us  to  understand 
that  this  land  can  be  cut  up  into  tracts  appropriate  for 
individual  ownership  in  grazing,  so  that  all  those  tracts 
will  be  supplied  with  water  ? 

Mr.  Huntington. — Yes,  sir  ;  and  it  is  what  the  graz- 
ing men  want.  I  received  a  letter  the  other  day  from 
Nevada,  saying  that  if  that  land  could.be  properly  cut 
up,  it  would  be  taken  up  very  soon  by  stock  men. 

The  Chairman.— Could  not  that  be  accomplished 
without  your  conveying  the  land,  by  changing  the  law  ? 
We  shall  have  to  change  the  law  after  that,  in  order  to 
make  the  surveys  conform  to  the  condition  of  the 
country,  instead  of  rectangular  ? 

Mr.  Huntington.  —I  do  not  know  ;  it  would  be  very 
difficult,  I  think.  The  -land  ought  really  to  belong  to 
one  owner.  I  do  believe  that  if  we  owned  all  the  land, 
we  could  realize  a  dollar  and  a  quarter  an  acre. 

Senator  Conkling. — Suppose  yon  could  have  your 
6,000,000  in  a  body  and  the  Government  could  have  its 
6,000,000  acres  in  a  body,  what  effect  would  that  have  ? 

Mr.  Huntington. — That  would  do  better,  but  we 
should  still  have  the  same  difficulty  at  both  edges  of 
our  strip  ;  besides  that  there  is  one  difficulty  always 
staring  us  in  the  face  in  all  that  outlying  country.  They 
tax  the  lands  and  they  make  the  railroad  property  pay 
everything.     One  year  we  paid  $39,000  gold,  tax   in  one 


:S3 

county.  I  guess  it  was  seven- eigtlis  of  the  tax  paid  in  the 
county.  They  willtax  these  lands  right  away  from  us. 
If  the  Government  had  them  they  would  not.  If  we  could 
hold  them  for  a  reasonable  time  and  not  pay  taxes  on  them 
we  could  sell  them.  They  get  up  a  little  ring  and  form  a 
county  with  perhaps  no  property  in  it  at  all,  and 
what  do  they  find  ?  They  find  j^erhaps  30  or  40  miles  of 
railroad  track  and  the  lands.  They  will  run  a  county 
from  the  taxes  on  that.  A  person  living  here  has  not 
much  idea  of  how  they  do  those  things  in  that  outlying 
country. 

Senator  McDonald, — The  railroad  companies  do  not 
take  title  until  the  expenses  of  subdividing  the  sections 
are  paid. 

Mr.  Huntington, — That  is  very  true,  but  they  are 
getting  bills  in  here  every  day  to  compel  us  to  take  title 
and  in  other  ways  to  get  at  the  lands  before  the  railroad 
company  could  put  them  to  any  good  use. 

Senator  McDonald. — The  railroad  company  has  not 
taken  title  to  much  of  this  land. 

Mr.  Huntington. — Not  much. 

Senator  McDonald. — Is  not  this  proposition  of  yours 
in  reference  to  reconveying  the  lands  to  the  United 
States  so  connected  with  your  other  proposition  that  it 
all  has  to  go  together  ? 

Mr.  Huntington.— No.  I  have  said  that  if  we  could 
get  a  little  longer  time 

Senator  McDonald. — The  annual  payments  would 
have  to  be  extended  over  a  longer  time  if  the  land  is 
not  taken  ? 

Mr.  Huntington. — I  believe  you  will  find  it  to  the 
interest  of  the  Government  to  take  the  lands.  They  are 
part  of  the  assets  ;  they  are  good.  If  they  are  not 
worth  a  dollar  and  a  quarter  to  the  acre,  say  what  they 
are  worth  ?  They  are  good  if  they  are  not  to  be  taxed  to 
death  :  but  we  had  better  let  you  have  them  at  a  2:ood 


24 

deal  less  than  they  are   worth   than   undertake  to  own 
them  as  things  are  to-day. 

Senator  Howe.— Suppose  the  Government  should  not 
want  the  lands,  can  you  suggest  any  alteration  of  the 
existing  law  for  the  disposition  of  the  reserved  sections 
which  would  aid  you  in  the  sale  of  the  lands  'i 

Mr.  Huntington  — I  should  say  there  could  be  some 
way  devised.  I  have  it  not  in  my  mind  now,  but  I  think 
some  way  could  be  devised,  which  is  better  than  it  is 
now,  because,  now,  it  is  the  worst  possible  thing  that 
could  be.     Any  change  would  be  for  the  better. 

Senator  Cheistiancy. — The  Government  might  give 
you  all  their  alternate  sections  on  one  side  of  the  road, 
and  you  give  the  Government  the  alternate  sections  on 
the  other  side. 

Mr.  Huntington. — But  the  assets  that  are  good  to  the 
Government  now  are  going  to  slip  out  of  our  hands.  I 
believe  this  debt  will  all  be  paid. 

Senator  Thurman. — In  answer  to  a  question  of  Sena- 
tor Conkling— I  believe  you  said  that  you  thought  I 
small  portion,  an  inconsiderable  portion,  of  these  lands 
have  been  surveyed  ? 

Mr.  Huntington. — I  do  not  know  how  many.  Some 
of  them  have  been. 

Senator  Thurman.— I  think  nearly  all  of  them  have 
been  surveyed. 

Mr.  Huntington.— I  had  thought  not. 

Senator  Thurman.— Much  the  larger  portion. 

Mr.  Huntington.— You  may  be  correct,  but  I  think 
not. 

Senator  McDonald.— They  have  been  surveyed,  but 
the  law  now  requires  the  company  to  pay  the  expenses 


-  25 

of  the  subdividing  surveys  before  they  can  get  the  title, 
and  that  is  not  done. 

Senator  Thurmais^. — That  was  the  law  in  regard  to 
the  Northern  Pacific. 

Mr.  Huntington. — It  is  on  the  Central.  We  have  to 
pay  the  survey  fees  before  we  get  title. 

Senator  McDonald. — It  has  been  decided  that  until  i 
the  title  has  been  issued  to  the  company,  the  property  is/ 
not  taxable. 

Mr.  Huntington. — Before  we  can  get  our  patent  we 
have  to  pay  for  the  survey.  They  have  bills  here  now 
to  make  us  pay  the  taxes,  anyhow. 

Senator  CoNKLiNG. — I  have  heard  it  affirmed  and  de- 
nied that  under  the  bill  which  was  j)roposed  last  winter 
and  is  here  now,  the  companies  could  not  only  live  and 
thrive,  but  pay  four  per  cent,  of  dividends  to  stock- 
holders, meaning  four  jjer  cent,  on  the  market  value  of 
the  stock.  I  wish  you  would  say  whatever  you  think 
is  true  on  that  point,  giving  your  reasons  for  it. 

Mr.  Huntington. — Well,  that  has  been  correct  for 
the  last  few  years  ;  if  you. include  all  the  roads  operat- 
ed by  the  company,  but  I  do  not  believe  it  will  be  when 
the  Southern  Pacific  is  through,  which  will  be  soon.  I 
think  in  the  next  five  years  the  Southern  Pacific  road  will 
be  through  to  the  Rio  Grande.  We  occasionally  have  a 
very  dry  year  (we  had  this  year)  called  "  off  years  " 
in  California.  These  branch  roads  of  ours,  which  the 
Government  did  not  aid,  running  up  through  those  great 
fat  valleys  in  California,  will  almost  always  make  net 
money.  This  year,  to  be  sure,  the  San  Joaquin  branch 
has  given  us  nothing,  scarcely  ;  but  we  generally  make 
some  money  there.  They  are  very  rich  valleys  and  are 
very  large.  We  have  one  branch  150  miles  from  Sacra- 
mento to  Redding,  and  one  146  miles  up  the  San  Joaquin  ; 
valley,  and  we  have  several  shorter  branches  that  will  ' 
always  pay. 


26 

Senator  Con  KLING. — To  be  sure  then  that  I  understood 
you,  so  far  your  answer  is  that  speaking  of  the  1,300 
miles  of  your  road,  800  of  which  are  aided  road,  and 
taking  the  last  three  or  four  years  prior  to  this,  under 
the  proposed  bill  they  could  live  and  pay  a  dividend  of 
four  per  cent,  on  the  market  value  of  the  stock? 

Mr.  Huntington. — J  should  think  we  could.  I  say 
we  have  our  "off  years,"  our  particular  years  when  we 
do  not  make  anything,  but  they  would  probably  average 
that. 

Senator  CoNKLiNG. — You  put  in  the  whole  1,300 miles 
to  come  to  that  statement  ? 

Mr.  Huntington. — Yes,  sir. 

Senator  Oonkling. — You  exclude  the  present  year. 
Why  do  you  do  that  ? 

Mr.  Huntington. — This  year  we  have  had  no  rain 
over  there.  We  sometimes  get  eighty  or  ninety  inches 
of  rain  in  places.  This  year  we  did  not  get  over  four 
or  five  inches  in  places. 

Senator  CoNKLiNG. — What  are  the  hardships  or  objec- 
tions in  this  bill  proposed  ? 

Mr.  Huntington.— It  brings  us  to  Washington  for 
one  thing.     It  would  bring  us  here  every  year 

Senator  Conkling. — For  what  'i 

Mr.  Huntington.— We  should  get  three  or  four  tele- 
grams that  somebody  has  introduced  a  bill  to  confiscate 
the  whole  property.  This  bill  settles  nothing. 
.  What  the  Central  Pacific  R.  R.  Co.  wants  is  a  final 
/  settlement  of  all  these  matters  with  the  Government, and 
an  act  that  calls  for  a  fixed  sum,  to  be  paid  semi-annu- 
/ally,  in  lieu  of  all  other  payments,  and  an  act  that  can- 
not be  changed  so  long  as  the  company  fulfills  its 
requirements. 


27 

Senator  Coistkling. — What  you  mean  is,  that  the  pro- 
posed bill  leaves  it  open  and  unsettled  ? 

Mr.  HuNTiT^TGTor^. — Yes — brings  us  here  to  see  the 
Secretary  of  the  Treasury  and  others. 

Senator  Conklikg. — What  other  difficulties  are  there 
in  the  proposed  bill  ? 

Mr.  Huntington. — I  read  it  over  and  it  is  objection- 
able. One  is,  that  if  we  accept  this,  next  year  you  may 
call  for  the  v^hole  earnings.  That  is  one  objection.  We 
could  not  accept  anything  that  was  not  a  finality,  if  we 
accepted  it.  If  it  was  to  pay  but  a  thousand  dollars  a 
year,  for  my  own  part  I  should  contest  it  just  as  closely 
in  the  Courts  as  though  it  was  to  pay  a  very  much  larger 
sum  ;  because,  if  we  accept  such  a  bill  we  are  all  at  sea. 

The  Chairman. — That  is  to  say,  you  have  no  con- 
fidence in  the  upright  judgment  of  Congress,  in  dealing 
between  you  and  the  people  of  the  United  States  ? 

Mr.  Huntington. — We  have  got  a  contract,  as  I  un- 
derstand it.  I  labored  with  all  my  associates  night 
after  night  to  get  them  in,  and  they  all  referred  it  to  the 
most  eminent  counsel  on  our  side,  and  this  side,  to  see 
what  the  law  was,  and  they  all  said  it  could  not  be 
changed  ;  and,  nevertheless,  we  find  every  session  some- 
body in  Congress  making  an  effort  to  change  it  without 
the  sanction  of  both  the  contracting  par  tie  . 

Senator  Conkling. — I  have  heard,  gentlemen,  for  ex- 
ample, during  these  hearings,  Mr.  Atkinson  and  others, 
allude  in  very  general  terms  to  the  inadmissible  features 
of  the  proposed  bill,  its  hardships  and  evil  tendencies, 
n  you  had  the  bill  before  you,  as  you  have  not,  or  if 
you  had  it  freshly  in  your  memory,  as  you  do  not  seem 
to  have,  I  wanted  to  ask  you  to  point  out  to  the  under- 
standing of  a  man  whose  understanding  is  as  cloudy  as 
mine  on  such  subjects,  what  those  matters  are  to  which 


allusion  is  so  frequently  made  ?  You  have  indicated  in 
general  terms  one  or  two  of  them.  On  the  other  side, 
I  hear,  for  example,  the  acting  Chairman  of  the  sub- 
committee say  that  he  has  looked  into  this  bill,  and 
that  he  is  satisfied  that  in  a  business  aspect  there  is  no 
hardship  about  it ;  and  I  would  like  in  some  way  to  be 
directed  to  the  points  in  issue,  and  the  respects  in  which 
those  two  affirmations  differ,  and  then  to  the  truth  of 
that  difference. 

Mr.  Si/N'ry^OTON. — I  think  I  could  take  the  bill  itself, 
and  sit  down  and  read  it  carefully  line  by  line,  and  I 
could  show  that  there  is  a  number  of  them. 

Senator  Howe.  —Could  you  not  make  this  a  final  set- 
tlement, as  well  as  the  one  proposed  by  the  companies  ? 

Mr.  HuNTiNTGTOis-.— We  could  not  live  under  this  bill. 

Senator  Howe.— Suppose  you  could  live,  if  it  was  as 
advantageous  as  yours,  and  make  it  a  final  settlement  ? 

Mr.  Huntington. — Certainly  ;  but  I  should  want  it 
in  the  bill,  that  whatever  we  agree  to,  so  long  as  we  ful- 
fill that,  we  cannot  be  touched. 

Senator  Davis.  —You  do  not  want  any  loop-holes  to 
creex")  out  of  ? 

Mr.  Huntington,— No,  we  want  to  pay  the  money, 
and  if  we  do  not,  then,  of  course,  it  is  proper  and  right 
that  the  government  should  make  the  companies  do  it. 

We  want  a  certainty  ;  to  know  just  how  much  we 
have  to  pay,  and  if  it  is  such  an  amount  as  we  think  w^e 
can  pay,  we  will  accept  the  bill. 

Senator  McDonald,— The  principal  objection  is  that 
by  this  bill  we  are  assuming  the  power  to  make  these 
changes,  irrespective  of  the  will  or  consent  of  the  com- 
pany, as  I  understand  it. 

Mr.  Huntington.— That  is  one  objection,  and  a  very 


f9 

grave  one ;  but  we  want  to  pay ;  we  offer  to  pay  the 
debt  and  its  interest ;  we  offer  to  commence  paying 
twenty  years,  and  more  than  twenty  years,  before  it  is 
due,  and  to  pay  it  all  within  ten  years  after  it  is  due. 

Senator  McDonald. — Your  proposition,  leaving  out 
the  land  question,  is  substantially  this,  except  as  to  the 
different  amounts  that  are  provided,  and  the  different 
mode.  You  propose  to  make  direct  payment  into  the 
treasury  instead  of  making  a  sinking  fuirinre^rott  Libr^T^ 

Mr.  Huntington. — We  propose  to  make  a  sinking 
fund  in  the  Treasury  to  pay  the  money  to  the  govern- 
ment. 

Senator  McDonald. — And  the  difference  is  in  the 
amount  which  your  proposition  would  set  apart  to  be 
paid  annually,  and  the  amount  this  bill  would  create  as 
a  sinking  fund. 

Mr,  Huntington. — We  pay  six  per  cent.,  (and  I 
believe  there  is  no  dispute  on  that  point),  that  when  we 
pay  the  government  six  per  cent,  we  should  get  six  per 
cent,  on  the  sums  we  pay  into  the  fund  before  the  debt 
is  due,  and  of  course  we  have  the  interest  computed 
every  six  months. 

The  Chairman. — What  do  you  pay  six  per  cent,  on  ? 

Mr.  Huntington.— The  government  bonds.  That  is, 
it  is  charged  to  us. 

The  Chairman. — You  mean  the  six  per  cent,  the  gov- 
ernment has  paid  ? 

Mr.  Huntington.— But  that  is  running  against  us. 

The  Chairman. — Do  you  mean  to  say  the  government 
is  to  charge  you  six  per  cent,  intei^st  for  the  payments 
it  has  made  for  interest  on  the  bonds  1 

Mr.  Huntington.— It  charges  the  six  per  cent,  as  it 


30 

matures.  There  is  no  interest  due  for  thirty  years  ;  but 
whatever  the  simple  interest  is  at  the  end  of  thirty  years 
we  shall  owe  to  the  government. 

The  Chairman.— That  is,  what  the  government  is 
paying  semi-annually,  at  the  end  of  thirty  years  will  be 
due,  but  without  interest,  as  I  understand  you. 

Mr.  Huntington. — Certainly. 

The  Chairman. — What  is  the  six  per  cent,  you  are 
paying  ? 

Mr.  Huntington. — It  is  what  we  propose  to  pay  and 
it  runs  against  us.  I  say  we  pay  it.  It  is  running 
against  the  company.  If  we  pay  any  before  it  is  due, 
so  much  as  we  pay  we  certainly  ought  to  have  interest 
on.  I  would  leave  that  to  ten  bankers  in  New  York,  and 
you  can  pick  them  all,  and  if  they  do  not  say  we  are  en- 
titled to  compound  interest,  as  it  were — 

Senator  Conkling. — That  is  to  the  discount  ? 

Mr.  Huntington. — Yes,  sir  ;  for  all  we  pay  before  it 
is  due,  you  may  have  your  action  if  there  is  one  out  of 
the  ten  does  not  say  we  are  entitled  to  it. 

The  Chairman.— I  had  the  impression  that  Congress 
stood  m  a  different  light  between  you  and  the  peojjle  of 
the  United  States,  if  it  has  the  power  to  act  at  all,  as  the 
Supreme  Court  has,  to  act  on  the  question  what  the  law 
now  means.  I  beg  you  to  understand  I  have  no  case  be- 
tween you  and  other  men. 

Mr.  Huntington. — Excuse  me  for  using  that  lan- 
guage.    I  did  not  mean  it  in  any  offensive  way. 

The  Chairman. — I  know  that,  but  I  thought  you  were 
stating  a  very  great  error.  Now,  I  will  beg  to  ask  you 
a  question  to  get  at  exactly  what  you  mean.  If  I  under- 
stand you,  you  think  that  the  eempanies,    on  whatever 


31 

you  do  pay,  ought  to  be  allowed  six  per  cent,  interest  as 
a  sinking  fund  with  annual  or  semi-annual  rests,  bet ause 
you  say  the  sum  that  is  being  charged  to  you  on  the 
other  hand  is  the  same  thing.  But  J  do  not  understand 
you  to  say  that  the  United  States  has  a  right  to  charge 
you  with  any  interest  on  the  money  it  pays,  but  only 
with  the  sum  of  money  (which  happens  to  be  six  per 
cent  on  the  bonds)  that  it  has  paid. 

Mr.  Huntington.— No  ;  the  law,  as  we  understand  it, 
does  not  require  it ;  we  were  told  by  some  of  the  best 
legal  minds  in  the  country  there  was  nothing  due  until 
thirty  years,  except  half  the  services  and  five  per  cent,  of 
the  net  earnings  after  completion,  and  on  that  my  belief 
is  based. 

The  Chairman. — I  am  not  asking  you  to  argue  the 
question,  but  I  merely  want  to  get  at  what  you  mean — 
what  you  mean  by  the  companies  being  obliged  to  pay 
six  per  cent,  is  that  the  company  is  obliged,  when  the 
proper  time  comes,  to  reimburse  the  United  States  for 
these  coupons  that  are  being  paid,  from  time  to  time, 
without  interest  on  the  coupon. 

Mr.  Huntington.— Yes — the  interest  you  pay  on  the 
bonds. 

The  Chairman. — But  the  very  sum  that  the  United 
States  paid.     That  is  what  I  understand  you  to  mean. 

Mr.  Huntington.— Yes. 

The  Chairman.* — Now,  I  want  to  ask  you  so  that  I 
may  understand  you,  whether,  supposing  Congress  has 
the  power  by  the  consent  of  your  companies,  under  the 
law,  to  rectify  these  things  according  to  its  judgment  of 
what  is  just  between  th;e  treasury  and  you — presuming 
that  to  be  so,  and  I  do  not  say  that  it  is  not — then  is 
not  the  substantial  objection  that  you  have  to  this  pro- 
posed method  of  accumulating  money,  that  it  asks  you 
to  do  too  much,  beyond  your  ability  fairly,    in  order  to 


32 

give   something    to   your    stockholders— beyond     your 
ability  to  accomplish  ? 

Mr.  HuNTiNGTON^.— That  is  the  main  reason.  Any- 
thing that  we  accept  we  want  to  abide  by.  We  want  to 
pay  some  money  and  have  it  settled,  as  much  on  our 
side,  I  believe,  as  the  government  wants  it  done. 

Senator  Thurman. — I  would  call  your  attention,  Mr. 
Huntington,  to  this  :  While  it  certainly  is  very  desirable 
and  perhaps  required  by  justice  that  this  sinking  fund 
should  keep  down  the  interest  that  you  have  to  pay  on 
an  amount  equal  to  that  which  is  put  in  the  sinking 
fund,  yet  inasmuch  as  the  interest  runs  against  the  com- 
pany without  any  rest  at  all,  if  the  accumulation  of  the 
sinking  fund  is  such  that  it  wdll  meet  that  interest  which 
the  company  ultimately  has  to  pay,  that  is  all  that 
equity  would  require,  is  it  not  ? 

Mr.  HuN^TiNUTON. — No;  the  equities  would  allow  us 
compound  interest  on  all  sums  paid  in  advance  of  matu- 
rity. The  stockholders  expected  a  very  mucli  larger 
return,  because  the  law  contemplates  ten  per  cent.  ; 
they  have  not  averaged  three. 

Senator  Thiirman. — But  your  proposition  amounts  to 
this,  reall}' — that  the  government  should  borrow  money 
at  six  per  cent.,  payable  semi-annually  for  twenty-three 
years,  when  the  government  can  borrow  all  the  money 
it  wants  at  about  four  per  cent. 

The  government  can  sell  its  four  per  cent,  bonds  at 
par,  or  substantially  so,  as  it  has  been  selling — how  long 
it  will  continue  to  do  so,  I  do  not  know — it  sells  its  41 
per  cent,  bonds  at  more  than  par  ;  and  under  such  cir- 
cumstances, you  would  hardly  expect  the  government 
to  borrow  money  for  23  years  at  the  rate  of  six  per  cent. , 
X)ayable  semi-annually. 

Mr  Huntington.— My  impression  is,  that  they  can 
use  all  the  money  they  will  get  from  this  source,  in  tak- 
ing in  their  five  twenties  that  do  bear  six  per  cent,  gold 
interest. 


Senator  Thurman. — If  they  would  agree  to  pay  that 
interest,  and  should  call  in  the  six  per  cent  bonds,  they 
would  gain  nothing. 

Mr.  HuiNfTiNGTON.~In  every  six  months,  if  they 
would  take  the  money  they  pay  off  the  coupons,  and  on 
re-investing  that,  there  is  your  fund  without  any  trou- 
ble. 

Senator  Thurman. — They  would  make  nothing.  It 
would  be  simply  an  extension  of  the  five- twenty  loan, 
which  they  have  the  right  to  call  in  now,  for  23  years. 

Mr.  Huntington. — My  answer  is,  that  it  was  not  ex- 
pected that  the  government  was  going  to  speculate  and 
make  money  from  these  companies.  The  government  gets 
a  vast  return  for  its  outlay  of  interest  by  the  existence 
of  the  road,  and  it  will  get  back  what  it  has  paid  out 
beside.  It  has  not  paid  the  principal  sums  yet,  but 
pays  interest  on  them,  because  it  had  to  borrow  at  the 
time  the  monej^  was  wanted,  and  that  is  a  conclusive 
reason  why  it  is  not  entitled  to  interest  upon  interest. 
If  it  gets  back  all  it  has  paid  out  as  interest,  that  is  all 
it  can  rightly  expect  from  the  companies. 


